FNB cuts charges, but other banking giants are unfazed
April 25, 2007
By Mzwandile Jacks
Johannesburg - First National Bank (FNB) had scrapped 15 banking fees and reduced 10 in an effort to "put money back into the pockets of its customers", it said yesterday.
But South Africa's other banking giants seemed unfazed, with some saying they had done their own price adjustments and did not have to repeat them because FNB had done so.
Erik Larsen, a spokesperson for Standard Bank, one of the country's top four consumer banking giants, said it had to be acknowledged that FNB and Standard Bank had different pricing policies.
"We are not going to react to what competitors are doing. We did our own pricing adjustments in January," Larsen said.
Standard Bank increased its transactional bank charges by an average of 3.5 percent in January. At the time, the company said the increases were well below the 5.1 percent consumer inflation rate excluding mortgage costs.
Bryan Mclachlan, the head of Nedbank's transaction and investment products, said that in the past year Nedbank had made significant changes, leading to a 13 percent reduction in transaction fees.
"We have led the industry in this regard. And we have committed to continue to provide customers better value by simplifying these charges.
"In the next review, which will be in the next few months, we will be announcing some good news for our customers," Mclachlan said.
FNB said yesterday that customers with cheque, transmission and credit accounts would enjoy free cellphone banking, telephonic banking, prepaid purchases, ATM balance inquiries and ATM cash deposits from June 1.
There will be no subscription fee, no transaction fee, and no limit to cellphone and telephone banking, purchase of prepaid airtime and electricity, or any other transactions at FNB ATMs.
FNB has 370 000 registered cellphone banking users. Cellphone banking is growing rapidly rate across the continent and FNB hopes to achieve a target of 1 million registered customers by the end of December next year.
The bank has more than 3.2 million customers, who hold more than 5 million accounts.
James Fowle, FNB's pricing executive, said the move to scrap these charges and reduce others would attract many customers.
South Africa's bank charges have courted controversy in recent years, with some saying they are the highest in the world.
Observers have maintained that comparing the cost of deposits, cheques and electronic transactions with those of other emerging markets, local banking fees were the most expensive after Brazil.
FNB said annual card fees would drop by 56 percent. Card fees for all credit cards had been standardised at R99 for customers choosing the electronic service offering, and R155 for those not on this service.
The electronic offering allows customers to receive e-mail statements and to pay card accounts through internet banking, ATM transfers, cellphone and telephone banking.
Fowle said the price reductions would encourage customers to change their transactional behaviour by using cost-effective electronic options.
The annual overall increase has been limited to 2.2 percent, which is below inflation. Most fees are unchanged, including FNB mini withdrawals.
Fowle said withdrawals from mini ATMs remained the cheapest in the market at just R1.50 for withdrawals of up to R500 and R5 for withdrawals greater than R500. ATM cash withdrawals were unchanged.
FNB has 2 600 ATMs and 1 500 mini ATMs nationwide. It has a 26 percent share of Saswitch ATM volume.
FNB will not charge the monthly overdraft fee for existing overdraft customers, but will charge a R14 fee to new personal overdrafts established after June 1 in terms of the National Credit Act, which comes into effect at about the same time.
Mzansi fees will be reduced by 14 percent. The same free cellphone, telephone, prepaid and ATM cash deposits will be available to Mzansi account holders.
Mzansi is a banking industry initiative (also available from Absa, Nedbank, Standard Bank and the Post Office) designed for anyone over 16 who has never had a bank account.
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